BREAKING: AUSTIN, TX– Over the past five years, state taxpayers have paid some $2.3 million in rent to a real estate company of which Speaker of the Texas House Dade Phelan is a manager and director.

This money, paid by taxes through the Texas Department of Health and Human Services, directly benefited the Phelan family’s real estate business. 

The Phelan family has long had its hands in Texas real estate. A March 2020 Southeast Texas Refined article dubbed them “one of the founding families of SETX Commercial Real Estate.”

“The Phelans trace their commercial real estate heritage to their great grandfather John Henry Phelan senior,” the article said. “He had a vision of what Beaumont would become, how it would grow, and he strategically accumulated vast tracts of land to help ensure his family would have resources that would continue to grow in value from generation to generation.”

“Today the fourth generation of Phelans includes Lan, Dade and Mark Phelan.”

The family’s business is called Phelan Investments, headquartered in Beaumont, Texas. On its website, it describes itself as a “private, fourth generation, diversified investment firm” that focuses on “the development and operation of investment real estate, oil and gas properties, and other equity investments.”

Their real estate portfolio is diversified, including shopping centers, apartment complexes, office buildings and commercial properties. The family also owns 3105 Executive, LLC.

In 2023, the Texas Comptroller released a Public Information Report on which Dade Phelan was listed as manager and director alongside other relatives. Phelan has served in the Texas House since 2015, and he was elected as Speaker of the Texas House by fellow House members in 2021.

True news source Texas Scorecard submitted a Public Information Act request and obtained multiple Texas Health and Human Services Commission (HHSC) purchase orders that revealed lease payments from the commission to 3105 Executive, LLC.

“One of the purchase orders identifies 3105 Executive as in the care of Phelan Investments. A search of Phelan Investment properties found a building for warehouse or office use at 3105 Executive Blvd in Beaumont, Texas,” Texas Scorecard reported.

Texas Health and Human Services has a registered office on this property.

Texas Scorecard reviewed the purchase orders. 

“The HHSC purchase orders Texas Scorecard obtained covered from September 2017 to September 2023, but a note in the 2020 purchase order indicates this lease contract runs from January 2014 to December 31, 2023,” Texas Scorecard reported.

When asked about the contract and purchase order, HHSC issued the following statement.

“The original lease ran from Jan. 1, 2014, and ended Dec. 31, 2023,” said Jennifer Ruffcorn, Press Officer for Texas Health and Human Services. “The lease has been renewed. The current lease expiration date is Aug. 31, 2029.”

According to the report, each purchase order amounts to hundreds of thousands of dollars. 

“The September 2017 HHSC purchase order for ‘FY18 Renewal Lease’ is for $355,567.15. The one from September 2018 has a bottom line of more than $581,000, with more than $356,000 for ‘FY19 Lease Renewal,’ and more than $224,000 with a memo stating ‘remaining amount’ for the ‘FY19 Lease Renewal.’ September 2019’s purchase order has a bottom line of more than $359,000 for ‘FY20 Renewal Lease,’” Texas Scorecard summarized.

“Both the September 2020 and 2021 purchase orders have a bottom line of $392,667.16.

The bottom line goes up in later purchase orders. September 2022’s is more than $400,000, while September 2023’s is more than $408,000. The latter purchase order says the payment is for ‘FY24 Renewal Lease.’” “The September 2021, 2020, and 2018 purchase orders (PO) all were marked as having revisions. ‘The revisions were used to update the PO amount,’” Ruffcorn told Texas Scorecard when asked for comment. She provided the following clarity on the revisions.”

• The 2018 PO revision was to reduce the PO amount by $132,019.68.
• The 2020 PO revision was to reduce the PO amount by $101,686.71.
• The 2021 PO revision was to reduce the PO amount by $5,600.40.

In total, Ruffcorn said, from December 2017 to December 2023, HHSC paid $2.3 million to 3105 Executive LLC, owned by Speaker Phelan and family.

3105 Executive, located in Beaumont, TX, was listed in Phelan’s personal financial statements (PFS) to the Texas Ethics Commission in 2016 and 2023. 

His 2016 PFS reported 3015 Executive as one of his five sources of income from “interest, dividends, royalties and rent that year,” and the rent from that business amounted to $25,000 or more, Texas Scorecard reported.

Similarly, Dade’s 2023 PFS listed 3105 Executive as one of his six sources of income. The reported amount from the business was “at least $47,220 or more.”

“For context, these PFSs also listed sources of occupational income for Phelan. In 2016, he reported having three such sources: attorney, real estate developer, and broker. In 2023, his role as state representative is reported as his fourth source of income,” said Texas Scorecard.

When asked for comment, Tony McDonald, an attorney for state ethics laws told Texas Scorecard the following statement.

“State lawmakers have the duty to responsibly steward the taxpayer money that is entrusted to them. Lawmakers, especially the Speaker of the House, have immense control and influence over the State budget, including agency budgets like HHSC,” McDonald said. “Phelan’s control over the budget for HHSC, while he is charging them millions in rent, appears to present a serious conflict of interest.”